In an op-ed for the Wall Street Journal, technology consulting firm Accenture directors Owen Jelf and Sigrid Seibold argued that blockchain technology will reshape the financial sector. As seems to be an ever growing trend, however, the two contend that blockchain technology should be stripped from its internal currencies.
As part of growing number of financial service providers, Accenture's global managing director of capital markets practice and the firm’s director of digital capital markets efforts openly embrace blockchain technology for the improvements in efficiency it could bring.
In their op-ed, the two claim that the technology underlying Bitcoin could vastly improve the process of clearing and settling trades. As such, Jelf and Sigrid Seibold see a lot of potential to replace current cumbersome front and back office practices.
“For the world’s capital markets, with hundreds of billions of dollars and according underlying assets swapped daily, blockchains offer the potential for greater efficiencies and less infrastructure across a number of marketplaces.”
As part of a clear trend among financial firms, however, the Accenture directors believe that Bitcoin itself has one big downside as well. While acknowledging that it works well for some markets, Jelf and Seibold argue that bitcoin the currency brings an expensive proof-of-work process along with it. The authors of the op-ed, therefore, believe it might be better to rid of the money system baked into the Bitcoin protocol.
Jelf and Seibold:
“The bitcoin protocol supports a highly decentralized currency validated through anonymous consensus on a public ledger held by entities around the world. But that objective introduced trade-offs, including a costly proof-of-work algorithm, public transaction data and a validation scheme that adds latency to the transaction process, by design. Though this model works for some markets, it is not a good enough fit yet for financial institutions, and it doesn’t meet the stringent needs of corporate CIOs and CTOs.”
Ideally, therefore, blockchain technology should be stripped from its internal currency, Jelf and Seibold argue. Essentially, the Accenture directors contend that the financial sector should embrace blockchain technology for all of the upsides that Bitcoin has introduced, but bar of the downsides.
The op-ed reads:
“To be used by financial institutions, including capital markets firms and insurers, blockchains must supplant the costly methods introduced by bitcoin with a mechanism that guarantees security, privacy and speed without paying for anonymous consensus.”
If these challenges can be overcome, the Accenture directors write, blockchain technology presents an enormous opportunity for the financial sector. Although musing about the possibility of permissioned ledgers, Jelf and Seibold in their piece do not specify how a secure yet coinless blockchain can be realized, precisely.
The op-ed fits seamlessly in a trend of financial industry players embracing blockchain technology but not bitcoin the currency or other cryptocurrencies. Greenwich Associates published a report last week in which the financial industry consulting firm predicted that blockchain technology would be embraced by capital markets, while The NASDAQ stock exchange, expects to integrate blockchain technology before the end of this year. The former CEO of the Chi-X stock exchange, furthermore, launched a blockchain startup earlier this week.